DERSTANDARD LeadershipStandard AUGUST2019| 15
GENERAL MANAGEMENT MBA
4Semester,berufsbegleitend, geblockteModule,in Deutsch&Englisch
Nächster Start: 8. November 2019MSc ENGINEERING MANAGEMENT
3Semes ter, berufsbegleitend,geblockteModule, in Englisch
Nächster Start: 22.November 2019MScRENEWABLE ENERGY SYSTEMS
4Semes ter, beru fsbegleitend,geblockteModule, in Englisch
Nächster Start: 19.März2020ULG IMMOBILIENWIRTSCHAFT &
LIEGENSCHAFTSMANAGEMENT
4Semes ter, beru fsbegleitend,inDeutsch
Nächster Start: 13.November 2019TechnischeUniversitätWien
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EDUCATION
CENTERAktuellstes
Wissen aus
Forschung
und PraxisExzellente
VortragendeBerufs-
begleitend &
praxisnahEinzigartiges,
internationales
Netzwerk100 0points. However, even the
best achievers applying this
method have so far only reached
around 600 points–ademonstra-
tion that the ECG Balance method
is neither prescriptive nor fits to
all companies acting in the mar-
ket, nor does it assume that all
companies meet every criterion.
No question: the ideal aim would
be to achieveamaximum number
of points; however, being realistic,
every company has to deal with
the tension between external and
internal forces which never can be
brought into the one-sided ideal
position that the ECG balance al-
gorithmwouldimply.(Bytheway,
the total sum for negative points
can be as low as –3.600 points).
The author of this article –
known as the inventor ofawidely
accepted intellectual capital re-
porting methodology that is struc-
turally close to the ECG balance
sheet methodology–would state
from his own practical experi-
ence, that whatever CSR model is
applied to an enterprise, it always
produces positive effects towards
achange for the better. The re-
maining question is what this
“better” would be.T
he ECG approach, through
its many and demanding
criteria may induce more
stress on managers to fulfil the of-
ten-contradictory requirements
from different stakeholder groups,
which might be characterised as
profit versus morality. It offers
clear and easy-to-check indicators
of good and bad, but it doesn’t
make prescriptions on how to run
an organisation. One thing is cer-
tain:meetingtheECGcriteriawith
positive results is very challeng-
ing because it requiresamore in-
tensive analysis than just quickly
answering some multiple choice
questions.
For example take the matrix
field on Transparency and Co-De-
termination with respect to theO
ne of the evident contradic-
tions imposed on responsi-
ble managers is the tension
between the obligation to make
profit and, and on the other side,
to conform to ethical standards
such as excluding certain types of
income generation. This conflict
is also marked by the paradigm
shift in stakeholder priorities.
During the last decades the un-
questioned expectation was that
shareholders and owners of an en-
terprise have an undisputed right
to make an ultimate profit, which,
by the way, conforms to the Mil-
ton Friedman doctrine of “the pur-
pose of the corporation” which
says is to maximise shareholder
value.
Larry Fink, Chairman and CEO
of the world largest investment
company BlackRock, i.e.aworld
leading “super capitalist” in 2018
wrote in his annual letter to the
CEOs of companies in which
BlackRock has an investment
stake (quote):“The prevalent be-
liefs and behaviours withinacom-
pany are organic but can be shaped
by the board and executive leader-
ship through their own example, as
well as through principles, policies,
and rewarded practices. The quote
widely attributed to management
expert Peter Drucker–‘culture eats
strategy for breakfast’–captures
the idea thatastrategy incompati-
ble withacompany’s culture will
fail. Culture is woven into engage-
ment on strategy because how a
company operates clearly has a
strong influence on what it
achieves.”
T
he question, however, man-
agers will ask themselves, is
how they can bring the two
key goals, a) conforming to opti-
mise financial results on the one
handandb)followingculturaland
thereby ethical standards into the
right balance.Acurrent general
debate on abalanced manage-
ment, can be identified asagrow-
ing need which is especially re-
quested by next generation em-
ployees. This debate is not affili-
ated withaspecific political direc-
tion, yet today we find that stu-
dents educated in business
schools and economic faculties of
universities are still being tutored
in an outmoded approach, while
they rightly ask to be much better
informed about alternative mod-
els of economy. This movement
currently pushed by students in
German speaking countries is de-
noted as “economic pluralism”.
To date companies and thereby
their managers commit–and by
legal obligations are committed –
to stick to the criteria of an ethical
management following known
standards of Corporate Social Re-
sponsibility (CSR). Until recently
such reporting has beenavolun-
teer exercise. Inanew develop-
ment, however, reports under the
heading of Non Financial (Infor-
mation) Reporting became an ob-
ligationimposedbyaEuropeandi-
rective currently applicable to
companies with more than 500
employees. The guidance for im-
plementation however, to meet
the NFI terms is little more than
five headlines. These are: (1) envi-
ronmental protection, (2) social
responsibility and treatment of
employees, (3) respect for human
rights(4)anti-corruptionandbrib-
ery, (5) diversity on company
boards (in terms of age, gender,
educational and professional
background). The Commission
through its information service
suggests, that the transformation
intonationallawsmaybebasedon
references given by the UN Global
Compact, and/or OECD’s Guide-
lines for multinational enterprises
and/or the norm ISO 26000.
One approach contributing to
greater clarification currently be-
ing discussed as for the social re-
sponsibility is the Public Value
Atlas, which obligates any man-
agement to make value statements
on (1) their task fulfilment, i.e. if
their company performs its core
business well, (2) social cohesion,
(3) quality of life and (4) morality
–this last oneamost vague cate-
gory for deliberate definition.A
much more sophisticated
and therefore much harder
to apply methodology giv-
ing practicable guidance to man-
agers is the Balance Sheet for the
Economy for the Common Good
(in short ECG Balance Sheet).
Whereas the Public Value Atlas
aims at composing amacro-
economic survey on the attitude of
managers and company employ-
ees versus the idea of Common
Goodingeneral,theBalanceSheet
of the Economy for the Common
Good addresses 20 different crite-
ria domains assembled inamatrix
defined along two dimensions, the
first one defining the four value
categories of Human Dignity, Soli-
darity and Social Justice, Environ-
mental Sustainability and Trans-
parency and Co-Determination. In
the second dimension five types of
stakeholder groups are identified:
Suppliers, Owners and Financial
Service Providers, Employees,
Customers and Business Partners
and finally the general Social
Context.
The contents of many of the ma-
trix fields are very well known to
any experienced manager, i.e. are
not really new as categories. The
innovative approach of the ECG
Balance Sheet is that this report-
ing method aims at completeness
which so far was not covered by
traditional CSR standards.
Despite charges in general po-
litical circles, that the ECG ap-
proach follows socialist concepts,
neither the inventors nor the us-
ers of the ECG Balance Sheet
methodology consider themselves
to be obliged to apply completely
and perfectly the whole scope of
criteria. Fulfilment of criteria of
the matrix is measured by allocat-
ingsocalledCommonGoodPoints
which can be added positively or,
in case of negative fulfilment can
be weighted negatively, i.e. sub-
tractive as well.
The ideal result–ifall criteria
were met completely–would bethe one or other direction. If we
aim to make society and its asso-
ciated economy better, we need to
findcompromisesonthenaturally
diverging interests of the many
different stakeholders participat-
ing in the economy.A
lthough there may beasus-
picion, that the ECG way of
modelling and implement-
ing economy is inclined to favour
one side of the balance bar as in-
troduced in the beginning of this
article, the uncontested argument
is, that 90 percent of the ECG
balance sheet criteria comply with
commonly accepted humanistic-
ethical and constitutional value
references. They have been
developed in democratic societies
since the Age of Enlightenment, in
essence saying that economic –
and thereby managerial–activi-
ties have to serve society and its
members and not the other way
around.
To make this last statement ef-
fective it evidently requires that
the neoliberal paradigm of today’s
economy has to be turned upside
down and put back on its feet.
This, however, necessitatesa“re-
programming” of the mindset of
managers who, so far in the major-
ity, have been educated in an eco-
nomic philosophy favouring the
maximization of financial profits
and the aggregation of wealth at
the cost of most of the non-finan-
cial, humanistic and environ-
mental benefits.ZURPERSON
GÜNTERKOCH
is President of the Humboldt
Cosmos Multiversity,Tener-
ife,and chairman of the
Research Associationofthe
Economyfor the Common
Good in Vienna.
Foto: El objetivo de Abrahamstakeholder group of customers.
The information to be collected
would be (quoting from the ECG
balance sheet preparation work-
book):QNumber of product and serv-
ice innovations contributing to
greater social and environmental
sustainability that have been co-
developed by participation of cus-
tomers
QProportion of products with
fully disclosed material/content
composition
QProportion of products and
services for which price calcula-
tion breakdowns are made avail-
able to the publicI
nendorsingtheECGapproach,
it is clear enough and admit-
ted, that it is painful to make
such data public and transparent.
It charges management with some
extra analysis and policy deci-
sions. Small companies are un-
likely to have sophisticated data
collections to conclude the infor-
mation easily from their data-
bases. Clear enough also the fact
that the requirements “ideologi-
cally” are influenced by an ideal
and idealistic philosophy how
companies serving the society
should be orientated and behave.
As practitioners and realists we,
supporters of the ECG approach,
arewellaware,thathumanandso-
cieties’ nature is dominated by di-
chotomies which cannot be easily
resolved by takingadecision inAUGUST2019|L5